3Q Home Equity Up $726 Billion from Year Ago

CoreLogic, Irvine, Calif., said U.S. homeowners with mortgages (63 percent of all homeowners) saw their equity increase by $227 billion in the third quarter from the previous quarter, an increase of 3.1 percent.

Year over year, home equity grew by $726 billion, an increase of 10.8 percent. The company said 384,000 borrowers moved out of negative equity, increasing the percentage of homes with positive equity to 93.7 percent of all mortgaged properties, or nearly 48 million homes.

CoreLogic said mortgaged residential properties with negative equity stood at 3.2 million, or 6.3 percent of all homes with a mortgage, a decrease of 10.7 percent quarter over quarter from 3.6 million homes, or 7.1 percent of mortgaged properties, the second quarter and a decrease of 24.1 percent year over year from 4.2 million homes, or 8.4 percent of mortgaged properties.

Negative equity peaked at 26 percent of mortgaged residential properties in Q4 2009, based on CoreLogic negative equity data, which goes back to Q3 2009. CoreLogic reported the national aggregate value of negative equity at $282 billion at the end of the third quarter, decreasing by $2.1 billion, or 0.8 percent, from $284 billion in the second quarter and decreasing year over year by $25 billion, or 8.2 percent, from nearly $307 billion.

“Price appreciation is the main ingredient for home equity wealth creation,” said Anand Nallathambi, president and CEO of CoreLogic. “Paydown of principal is the second key component of equity building. Many homeowners have refinanced into shorter-term loans, such as a 15-year loan, and by doing so, they have significantly fewer mortgage payments and are able to build equity wealth faster.”

Other report metrics:

–Texas had the highest percentage of homes with positive equity at 98.4 percent, followed by Alaska (98.1 percent), Colorado (97.9 percent), Utah (97.9 percent) and Washington (97.9 percent).

–On average, homeowner equity increased by $13,000 over the past year (for mortgaged properties). California, Oregon and Washington saw increases of $25,000 to $30,000, while Alaska, Connecticut and North Dakota experienced small declines.

–Nevada had the highest percentage of mortgaged properties in negative equity at 14.2 percent, followed by Florida (12.5 percent), Illinois (10.6 percent), Arizona (10.6 percent) and Rhode Island (10 percent). These top five states combined accounted for 30.6 percent of negative equity mortgages in the U.S., but only 16.3 percent of outstanding mortgages.

–Of the 10 largest metropolitan areas by population, San Francisco had the highest percentage of mortgaged properties in a positive equity position at 99.4 percent, followed by Houston (98.5 percent), Denver (98.4 percent), Los Angeles (96.9 percent) and Boston (95.3 percent).

–Miami had the highest percentage of mortgaged properties in negative equity at 17 percent, followed by Las Vegas (16.2 percent), Chicago (12.2 percent), Washington. D.C. (8.7 percent) and New York (5.1 percent).

–The bulk of home equity for mortgaged properties is concentrated at the high end of the housing market; 96 percent of homes valued at greater than $200,000 have equity compared with 90 percent of homes valued at less than $200,000.